Telecommunications Amendment Bill: deliberations and voting

Meeting report

LABOUR AND PUBLIC ENTERPRISES SELECT COMMITTEE
4 February 2004
TELECOMMUNICATIONS AMENDMENT BILL: DELIBERATIONS AND VOTING

Chairperson: Ms C Nkuna

Document handed out
Telecommunications Amendment Bill [B65B-2003] as amended by the Portfolio Committee
Sentech submission (document awaited)

SUMMARY
The Department and Sentech motivated why Sentech should be declared a public operator. They argued that as a public operator they would be able to use Telkom's facilities at wholesale rates and then pass these savings on to those who use their facilities. This would lead to an improved telecommunications network in the country. The Bill was voted on and passed by the Committee.

MINUTES
The Chair explained that the reason for the amendment to the Act was that Sentech had been excluded as a public operator. The amendment would enable it to now to operate as one. She welcomed the representatives from the Department and Sentech who each gave input:

Department input on the Bill
Mr P Pongwana, Senior General Manager: Telecommunications Policy, Department of Communications stated that should Sentech be declared a public operator as their services would be able to be made available to the general public. They would be able to obtain facilities from the incumbent operator on a wholesale basis and provide services at a comparable scale to the incumbent operator. It would therefore be creating some form of competition. This would also lead to a clearer environment in the telecommunications arena.

Discussion
The Chair asked whether it had been an oversight not to declare Sentech a public operator when the regulations were made.

Mr Pongwana replied that:
- The regulations that had been there since 1996 did not state that Sentech was a public operator. When an amendment was promulgated in 2001, the Independent Communications Authority of South Africa (ICASA) was required to supplement the regulations of the Telecommunications Act. The effect of the regulations was to declare Sentech as a public operator to provide services to other service providers. This had happened at the time when ICASA was attending to funding of the incumbent operator. At this time, plans for a second fixed line operator were also being discussed. Much contestation had taken place at that time. As a result of all this contestation, Sentech had been excluded as a public operator.
- In the first guidelines that had been published by ICASA, it was declared that Sentech was a public operator. With all the contestation that had taken place, Sentech had ended up not being declared a public operator. The definition of a public operator however was only in the guidelines and not in law. Sentech then took Telkom to court and the Ministry and ICASA were named as the second and third respondents. ICASA and the Department however decided not to contest as they both believed that Sentech was a public operator.
- In discussions that followed it had emerged that should this court case continue, it would affect the services which Sentech was supposed to provide. It was then decided that the best way around this was to provide this amendment and then to ask the parties to withdraw their action.

Mr B Tolo (ANC) asked whether it was normal practice for one state department to take another to court.

Col. Pongwana replied that it was a difficult matter but that it would depend on the extent of the state ownership of the enterprise. It became a problem when private ownership was involved.

Mr T Setona (ANC) said that the law should be the ultimate guide otherwise many misconceptions could happen.

The Chair asked Mr Pongwana to comment on the second set of guidelines that were drawn up.

Col. Pongwana said that the first set of guidelines spelt out how operators should relate to each other, for example how Sentech should get infrastructure from Telkom at wholesale price. These guidelines however only related to Telkom and the mobile phone operators. When the second fixed line operator entered the arena, a second set of guidelines would be needed.

Sentech submission on the Bill
Mr G Marumo, Chief Operations Officer of Sentech, said that the change to being a public operator would enable many communities to obtain telecommunications. The cost of these services will be driven down and competitive pricing would be ensured.

Mr D Dube, Senior Manager: Government and Regulatory Affairs of Sentech, said that the guidelines in the Act state that there was a basis for wholesale prices for Sentech. The regulations however do not state that Sentech was a public operator. If it were to continue to provide services at retail rates, it would be in violation of the Act.

Mr J Raath, Group Executive: Business Development, then took the Committee through the Powerpoint presentation attached.

Mr Dube added that Section 32(c)(2) and Section 42 puts restrictions upon Sentech to operate as a public operator.

Discussion
The Chair asked if these issues would still prevail even if the amendment was approved.

Mr Marumo replied that the amendment would rectify the issues raised.

Mr L Lever (DA) asked if more options would be provided for value added network services should the amendment be approved.

Mr Marumo replied that public operator status would allow for facilities to be obtained at wholesale prices from Telkom. It did change the other issues in the Act which are limitations for Sentech.

The Chair asked what Sentech meant when it said that it would interact with the end-user. She also wanted to know what the radio link was in an overseas call.

Mr Marumo replied that there were many ways to conduct communications. One of these ways was to use satellites. This kind of communication however did have some delay in the transmission of the communication. As a public operator, it was Sentech's aim to maintain superior services. If it were able to operate as a public operator, it would be able to mix the way communication was taking place such as via satellite and cable, which would be more advantageous. Sentech had the advantage of having much satellite space but needed the optic fibre cables as well so they therefore needed the Telkom infrastructure.

Mr Lever (DA) raised the issue of competition and said the competition in price should cause prices to drop which should lead to an increased take-up and increased revenue. He wanted to know if Sentech had done any projections regarding the increase in traffic flow and also the influence on Gross Domestic Product. He also asked if Sentech would be competing with Telkom.

Mr Marumo replied that studies had been done and so they knew the amount of traffic that they could carry. He also pointed out that the benefits could not always be seen in figures but rather in other ways such as in the medical field.

Ms D Ramodibe (ANC) asked if the wholesale pricing would only benefit Sentech or if the end-user would also benefit.

Mr Marumo replied that at present, the mobile operators were using Sentech's network. If the law were amended, costing could be done correctly.

Mr Raath added that they learnt from Telkom's prices. It was hoped should they obtain facilities at a cheaper rate they could offer their services to overseas operators, multimedia services and mobile operators at a cheaper price. It was hoped that these savings would be passed on to the end-user particularly by the mobile networks.

Mr Z Kolweni (ANC) asked how long it would take for these benefits to happen once the amendment was approved.

The Chair pointed out that once the amendment is approved, the Department would have to draw up the regulations first.

Mr T Setona (ANC) asked about the state of Sentech's readiness to do what it wanted to do.

Mr Marumo replied that Sentech had all the technology needed and more. Sentech could provide links not only for operators but also for voice traffic. He pointed out that in the Eastern Cape two hospitals were using telemedicine by means of Sentech's infrastructure to diagnose sicknesses more quickly.

Mr Setona (ANC) thanked the Department and Sentech for their presentations and said that had been an enriching exercise.

The Chair said that the Committee was ready to see telecommunications liberalised in the country

Voting on the Bill
The Bill was put before the Committee. Mr Lever proposed that it be accepted and Mr Kolweni seconded. The Bill was then accepted unanimously without change.

The meeting was adjourned.